Deregulation is not the promised land

ByDaniel SchorrSeptember 12, 2003

WASHINGTON
— For the era of deregulation and the lax enforcement of regulations, this may have been like a cloud no bigger than a man's hand. But in one day's newspapers last week I read that the new Federal Communications Commission rule opening the way to bigger media conglomerates had suddenly gotten stuck in a federal appeals court and in Congress. Then, there was testimony before the House Energy Committee indicating that hundreds of violations of transmission-grid rules had contributed to the big blackout of mid-August. And, the same day, there was testimony before a Senate committee that loose enforcement of safety rules may have contributed to the space shuttle Columbia disaster.

So, I began to wonder whether it was time for some rethinking of the glories of deregulation. Gov. Gray Davis (D) of California stated that the Enron corporation and the Bush administration, exploiting federal deregulatory policies, were responsible for the state's electricity crisis - a crisis that left its mark on the current recall controversy. Remember how shocked we were to learn that Enron's Ken Lay was allowed to help select the members of the Federal Energy Regulatory Commission that was supposed to regulate him?

That was when West Coast electricity rates had shot up - by an average of 40 percent in the Northwest.

I thought back to the savings and loan debacle of the 1980s, the deregulation that left the taxpayer to make up for billions in losses in bank failures. And the 1996 Telecommunications Act, which led to the breakup of the telephone company and left us with a confusing array of fiercely competitive companies.

Maybe it's just my age, but I'm nostalgic for Ma Bell, and all the Baby Bells.

There was also the gradual deregulation of the natural-gas companies with the promise that free market competition would bring lower prices. But my gas bills have been going up just in the past month.

And, while I'm at it, I may as well mention airline deregulation in 1978, which was supposed to give us cheaper fares and more planes flying to more places. But no one told us it would give us higher rates over monopoly routes and a hub-and-spoke system that gave us more time in crowded airports to reflect on the aviation free market.

In my youth, monopolies and semi-monopolies like gas and electricity were regulated in the public interest by public service commissions. That day is long since gone. But deregulation has not turned out, in many cases, to be the promised land.